Mr. Rao recently invested Rs 2,00,000/- in the dividend option of a equity scheme of a leading mutual fund house on the suggestion of his financial advisor. Some days back, he got an sms from the mutual fund informing him that a 60% dividend had been declared on the mutual fund scheme and would be credited into his a/c in a few days. Mr. Rao was very happy to hear this and was glad to have made the right investment decision and receive a huge tax free dividend.
A few days later the dividend was credited to his a/c. He was shocked to see the amount. It was around Rs. 12,000/- which was hardly 6 % of his investment amount. He was unable to understand how a 60 % dividend declared could be such a small sum.